San Francisco-based investment bank and stock brokerage, Charles Schwab Corporation said it will acquire TD Ameritrade for a deal sum of $26 billion.
According to people close to the deal, the acquisition will be announced this morning, will allow Charles Schwab to better compete with the likes of BlackRock.
TD Ameritrade CEO Tim Hockey, who announced in July that he would leave by the end of February, has acknowledged that his own firm’s decision to adopt zero commissions would prompt speculation about mergers.
“We will take a look at anything that makes financial and strategic sense,” he said last month, outlining the company’s plans to make up for lost revenue of as much as $240 million a quarter from the new commission structure. “Scale is important. We have scale. We’re very comfortable with our earnings power now, even in this new environment. ”
Last month, Schwab announced it was slashing its commissions for online trades to zero, causing rivals E-Trade and Fidelity to follow suit. Eliminating the $4.95 per trade commission will cost Schwab $90 million to $100 million in quarterly revenue, or about 3 percent to 4 percent of its total.